After lots of debugging it was found that the code and database definitions that handled presence of avatars was out of sync for the PostgreSQL database. This has been corrected and the grid now records and reports presence of avatars on the grid as expected.
This will make it possible to fix other issues that relies on presence service to work. First and foremost offline IM messaging. While this is being sorted out a temporary stopgap has been applied, but it will most likely cause you to see duplicates of messages sent to you.